Partnership

In any business venture it better that we invest less on the capital investments which normally generates the Fixed assets. As such, you do not generate income from such capital investments. It is usually ventured by the business community to invest less on the capital equipment and more on the working capital.

There are many ways to get the equipment finance like leasing. The sales lease back strategy in the matter of equipment financing is more prevalent in many countries and is very helpful to unlock the capital and put it into the working capital to generate the profit.

The sale lease back equipment financing is certain to improve the liquidity. The equipment you own is financed under the lease financing and the amount can be used for meeting out the operational expenditure like buying raw materials and meeting other daily expenditures.

The only issue you have to address is the tax matter since the finance you are getting over and above the book value is liable for tax. However, the fund you are getting to meet the working capital requirement will compensate the tax burden by improving the bottom line.

Hence it is advisable that, the business firms go in for the equipment financing rather than investing the sum meant for the working capital.